Making Property-Tax Assessments a Job for the County, Not Towns

New Jersey localities may be close to radically altering the way they assess and collect property taxes. In the hopes of saving taxpayers money, two state lawmakers who represent the Atlantic County area are trying to shift these responsibilities away from municipalities and into the hands of a county-level assessor.

Senator Jeff Van Drew (D-Cape May Court House) plans to introduce legislation this month to allow counties to opt in to such a plan, while last week, newly inaugurated assemblyman Vince Mazzeo (D-Northfield) introduced a bill to add Atlantic County to a state pilot program that currently permits only Gloucester County to operate under such a system.

Atlantic County Executive Dennis Levinson has pushed the idea for years.

“This archaic idea of home rule has made New Jersey the highest-tax state in the country,” said Levinson, a Republican. “Until this idea ends that every municipality has to have everything, we’re going to continue to pay more in taxes.”

Although the Van Drew and Mazzeo bills differ in scope, their goals are the same: to save taxpayers money by eliminating duplicative assessors, hired individually by every municipality, and to apply a regularly scheduled real property-value assessment to cut down on the need for appeals and reassessments that often cost counties and municipalities more. Mazzeo’s bill requires a county-led assessment every three years.

“In my campaign I said I would be trying to cut property taxes, and I think it’s a good way to try to start off,” said Mazzeo, who was mayor of the Atlantic County municipality of Northfield until he took state office in January.

How the system currently works in New Jersey is this: Municipalities are supposed to conduct assessments every few years but the process is so laborious and expensive they often require prodding from the county. When too much time passes between assessments, real property values can fluctuate wildly from what’s on the books. Property owners have a right to appeal, which leads to an individual reassessment and a possible refund.

Ideally, the true value of a property would equal 100 percent of its assessed value -- no more and no less. Yet as an example, Mazzeo says Northfield comes in at only 50 percent, meaning the county is only collecting an average of half of what it should in property taxes and therefore not contributing its fair share to support county services. Atlantic County’s other municipalities have to pick up the slack.

Over-valuations can prove just as problematic. Since the recession began, local government officials have watched as property values have dropped and property owners have filed more appeals to dispute their assessments, on the grounds, of course, that they’re too high. In these cases, a judge may rule that the municipality owes the property owners a refund.

The situation is particularly acute in Atlantic City, where, according to Levinson, the property tax base has dropped by one-third, or $18 billion, since 2008. Largely to blame are the casinos, whose revenues and property values have been plummeting since their peak in 2006.

In December, Borgata, the city’s highest-grossing casino, joined a growing list of gaming establishments that have been awarded refunds. The city must return $48 million to Borgata for overvaluations from 2007 to 2012, while figuring out how to dodge potential bankruptcy. In the meantime, neighboring communities will have to shoulder the weight.

“If the county had been in charge (the assessments) would have been kept up to date,” Levinson said.

Thanks to the New Jersey casino industry’s ongoing freefall, Levinson doesn’t expect the situation to improve. For this reason, says Mazzeo, Atlantic County is uniquely poised to participate in the program.

“Atlantic City has been faced with casino tax appeals that cost a lot of tax revenue for city and county. When you lose that type of revenue, a lot of times the rest of the county has to make up for that,” he said.

Though it’s not in his bill, Mazzeo also plans to look at a technique used in Monmouth County, which moves the deadline for appeals from April 1 back to January 1. This would give towns and counties a chance of develop realistic budgets, since they would have their numbers in hand by April 1.

Van Drew, who worked on the Monmouth model as chair of the Senate Community and Urban Affairs Committee, would rather see all of these changes implemented statewide.

“(Inaccurate assessments) are a real problem in Atlantic County. It’s a problem in a lot of places. It’s somewhat dysfunctional because it’s not a unified approach,” said Van Drew.

Officials in Gloucester County, who pushed for passage of the pilot program in 2009 with the help of native son Senate President Steve Sweeney (D-Gloucester), say their 24 municipalities have saved $4.3 million since 2010. Freeholder Director Robert Damminger reports that prior to the program, Deptford Township was facing a revaluation that would have cost the township an estimated $1.2 million.

Instead, he says, the county took over the task, to the pleasure of local officials in Deptford and elsewhere.

“This program alleviates these costs,” he said. “And by utilizing technology, the assessments can be performed every three years to keep fair assessment values.”

But at least one municipal employee in Atlantic County is expressing some skepticism that what’s good for suburban Gloucester County is good for the Shore, where the value of beach houses can reach into the millions of dollars. Somers Point City Administrator Wes Swain cautions that it’s too early for detailed comment, since Mazzeo’s bill leaves out some specifics -- such as who pays for valuations for the first few years. But he's concerned about giving up control of local affairs only to “end up paying the same amounts while merely shifting where we pay it.”

“Someone needs to actually show me how we’re going to save,” he said. “It seems to me you’re taking the fight off the battlefield and into the war room.”